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What is the staying power of an MBA education? Why year after year do students sign up for the countless MBA programmes across the world? Are they after new skills? Maybe. Eager to learn about the latest academic research output? Unlikely. Keen to go through a learning experience? Possibly. In search of a networking opportunity? Most certainly.

But perhaps a principle motive is to boost their career prospects. The notion that the harder you work, the higher you will climb the corporate — and therefore social — ladder is rooted in our DNA. Very often, this also translates into the higher you are in the corporate echelons, the more successful you are. For many, an MBA degree promises to deliver this; for anyone wishing to progress in their career, just get an MBA and its magic will do the rest.

Except that this magic stopped working quite a long time ago.

On the one hand the financial crisis of 2008 caused many businesses to cut hiring, leading to a shortage of those jobs that MBA graduates covet. For others there has been a dawning realisation that cost-cutting employers are unlikely to offer financial sponsorship for those wishing to study for an MBA. As a result students have resorted to taking out large loans to finance their business education.

Traditionally baby boomers considered taking on debt justifiable when using it to fund further education. The thought process went as follows: if taking on debt to fund MBA study will lead to a well-remunerated job and this post-MBA income will pay off the outstanding debt within a few years of graduation, then it is not too much of a liability. However, what is often not taken into account in this line of thinking is what happens if the macro conditions change? What happens if the job market can no longer absorb the army of higher educated talent that business schools churn out in large numbers every year? Is an MBA really the ticket for students to go to where they want to go. And is an MBA the right type of investment, today, in our global economies?

Today’s labour market is very different to the one the baby boomers entered. As the world becomes ever more non-linear and unpredictable, not only is it difficult to anticipate what troubles lie ahead, it also makes it more difficult to justify the use of debt to finance MBA study, as well as to know how that debt will be transformed into a life of guaranteed success.

Any MBA graduate understands that you should get a greater return on what you have invested in order to call it a success. However, the career prospects for MBA degrees may be changing. In a recent study — The Future of Business Education & the Needs of Employers 2014 — a chief executive said; “Unless you graduate from one of the top five MBA programmes in the country doing an MBA is far from being worth it”. And the report, based on interviews with more than a 100 global chief executives, found that given the choice they would rather not hire any MBA graduates.

MBA students from business schools around the globe write about their experiences

At the same time, some business schools have seemingly lost sight of their raison d'être: to educate. We have previously argued that instructors with little or even no work experience often teach business school subjects in silos. To make matters worse, curricula (thanks partially for the standardised accreditation criteria) have hardly changed to reflect the current developments of the economic and business landscapes. The result is that much of what is taught is outdated and obsolete in significant ways. It is hard to see how MBA graduates are able to gain a high return or a high return, rapidly.

MBA applicants may also want to find out how their debt-funded tuition fees are spent by business schools. Tuition fees often go into those things that matter least to improving MBA students’ marketability: glossy campuses and state of the art facilities. While infrastructure improvement may enhance students’ learning experience, it is doubtful how much a good-looking campus can add to students’ competitive advantage over other graduates in a very tight job market.

The impact of student loans can have further implications. When students are carrying a lot of debt, they will have the tendency to accept any paying job, even if the job does not necessarily match their aspiration or talent. This is not only a recipe for unhappy careers and lives; it is also a direct loss of productive and innovative resources to society as a whole, or what an enlightened economist may dare to call “national happiness”.

By no account are we undermining the importance of education. As educators ourselves, we are well aware of the value of studying. But if students are buying education programmes with debt, we would ask them to think it through very carefully before making this potentially life-changing decision.

Terence Tse is associate professor of finance at the London campus of ESCP Europe Business School and head of Competitiveness Studies at i7 Institute of Innovation and Competitiveness.

Mark Esposito is associate professor of business and economics at Grenoble Ecole de Management, an instructor at Harvard Extension School and a senior associate at the University of Cambridge, CISL.